Before Franchising in Taiwan: How to Verify Trade Mark Ownership and Sublicensing Rights

Turning an existing business in Taiwan into a franchise network requires more than checking whether its branding is popular. You also need to establish whether head office can legally authorise others to use it. A trade mark may belong to the founder personally, or it may be licensed from another company. Long-standing use by company-owned outlets does not mean the franchisor holds all the necessary rights. Before recruiting franchisees, carry out a thorough review of your authority to license the trade marks.

1. Trace ownership from the branding actually in use

Start by listing the brand elements your outlets actually use, including Chinese and foreign-language names, graphics and combined marks. Check each one against the trade mark records held by Taiwan’s Intellectual Property Office, under the Ministry of Economic Affairs. Do not search only for the company name, or treat company or domain name registration as proof of trade mark registration.

Create a checklist recording at least the following for each trade mark:

• The representation of the mark and its application or registration number.
• The registered owner and current status of the rights.
• The designated goods or services, and how these correspond to actual use in your outlets.
• The expiry date, the person responsible for renewal and reminder dates.
• Relevant licensing documents and any unresolved disputes.

Filing an application is not the same as securing registration, and registration for certain goods does not necessarily cover every service an outlet provides. For example, packaged food and restaurant services may fall within different scopes of protection. If your signage has been redesigned, also check whether differences between the mark currently used and the registered version call for a new application or professional assessment.

2. Confirm that the contracting franchisor has sublicensing rights

The central question is not ‘Who founded the brand?’ but ‘What gives the company named in the franchise agreement the authority to license it to franchisees?’ If the trade mark is registered in the founder’s name, the individual and the company remain separate legal persons. Their relationship should be documented through a clear licence, rather than relying on verbal consent.

If head office is itself a licensee, check whether the original licence permits sublicensing, its geographical coverage, the goods or services covered, its duration and whether the trade mark owner must approve each outlet individually. Taiwan’s Trade Mark Act distinguishes between exclusive and non-exclusive licences. A non-exclusive licensee cannot sublicense the mark without the owner’s consent. For an exclusive licence, you must also check whether the original contract imposes any restrictions.

Do not overlook licence registration. Under the Trade Mark Act, an unregistered trade mark licence cannot be asserted against third parties. This is a separate question from whether the licence agreement is valid between the parties themselves. Head office should seek professional advice on registration arrangements, rather than assuming that obtaining a signed document completes the process.

Pay particular attention to the respective terms: if the underlying licence expires before the franchise agreement, head office must not sell an unsecured renewal as though it were an established right.

3. Turn your findings into clear licensing terms

Taiwan has no single dedicated franchise statute, but franchising is not unregulated. Trade mark ownership and licensing fall under the Trade Mark Act, contractual relationships involve the Civil Code, and recruitment and trading practices are also subject to the Fair Trade Act.

The Taiwan Fair Trade Commission’s guidelines on franchisors’ business conduct identify the names of licensed intellectual property rights, including trade mark rights, their scope of use and restrictions as material franchise information. Point 3 specifies disclosure ten days before entering into a franchise or preliminary franchise relationship, within a reasonable period determined on a case-by-case basis, or within a period agreed by both parties. A breach of the relevant requirements that is sufficient to affect trading order may constitute a violation of Article 25 of the Fair Trade Act.

The trade mark schedule to the agreement should therefore contain more than a brand logo. It should identify the permitted marks, outlets and territories, approved goods or services, and permitted uses on signage, packaging, delivery platforms and social media. It should also explain whether franchisees may alter the mark, produce branded merchandise or allow other operators to use it.

These restrictions must reflect the rights actually granted. If the underlying licence permits use only for outlet operations, the franchise agreement should not expand this into a licence to manufacture goods. Where a trade mark application is still pending, its status should be disclosed accurately rather than presented as registered protection.

4. Plan ahead for interruptions to trade mark rights

Rights checks should not end once the contract is signed. Appoint someone to monitor renewals, expiry of the underlying licence and disputes over rights, and retain records of notices and action taken. If a franchisee receives an infringement warning, they should know whom to notify, what evidence to preserve and who is responsible for contacting professional advisers.

The contract should also address situations in which the trade mark can no longer be used. This includes procedures for notifying franchisees to suspend use, approval of replacement branding, the cost of replacing signage and packaging, and what happens if use cannot be restored for an extended period. Responsibility should reflect the cause of the problem; franchisees should not automatically bear all rebranding costs.

For example, head office’s failure to renew a registration on time should not trigger exactly the same allocation of responsibility as a franchisee’s unauthorised use of an unapproved mark. These arrangements are risk-management recommendations, not a standard compensation formula prescribed by law.

Practical takeaway: establish who owns the rights, secure the licensing chain, and only then promise franchisees what they may use and for how long. Until you can demonstrate your authority to sublicense, do not treat brand usage rights as a franchise offering ready for sale.